WASHINGTON (6/1/15)--A financial firm is alleged to have charges higher broker fees to African-Americans and Hispanics, resulting in a proposed enforcement action filed by the U.S. Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB).
Provident Funding Associated would be required to pay $9 million in damages if a court approves the proposed order.
The California-based company is alleged to, between 2006 and 2011, have set a risk-based interest rate and then allowed its brokers to charge a higher rate to consumers. Provident would then pay the brokers some of the increased interest revenue from the higher rates.
The DOJ and CFPB believe Provident charged African-Americans and Hispanics more in total brokers’ fees than white borrowers based solely on their race and national origin. This would constitute violations of both the Equal Credit Opportunity Act and Fair Housing Act.
The complaint was filed in the U.S. District Court for the Northern District of California, and if approved would require Provident to:
According to the CFPB, the proposed order will have the full force of law only when signed by the court’s presiding judge.